Increased Supply of IT Panels in 2018 May Pose a Risk of Oversupply, Says TrendForce

According to the latest IT panel shipment report of WitsView, a division of TrendForce, the total shipments of PC monitor panels and notebook panels in 2017 were 314.94 million pieces, a YoY increase of 3%. In 2018, IT panel makers will focus on reducing border size, increasing viewing angle and resolution. Vendors also aim to drive shipments through specification upgrade. It is expected that the total shipments of PC monitor panels and notebook panels will reach 326.37 million pieces in 2018, a YoY increase of 3.6%.

“The shipments of monitor panels have witnessed continuous decline due to saturation of market and panel size increases”, says Iris Hu, the research manager of WitsView. The number of monitor panels shipped worldwide was 137.59 million units in 2017, a YoY decline of 1.6%. On the other hand, demand for notebook panels kept going up quarter by quarter in 2017 thanks to bidding orders from North America and promotion by Chinese vendors in 2H17. The annual shipments totaled 177.35 million units, a YoY increase of 6.9%. This also indicates that the market growth comes back to a positive figure after two years of recession.

Innolux and BOE will expand production, so the monitor panel market will see an oversupply with a glut ratio of 4.9%

Influenced by the traditional off-season, the shipment of monitor is expected to decline by 10%-11% in 1Q18. However, “the shipment of monitor panels in 1Q18 will grow by 0.4% against the trend due to the low prices”, says Hu. For mainstream panels, the current prices are 12% -15% lower than the same period of last year. Therefore, monitor makers, who currently have a low inventory level, will stock up.

As Innolux’s Gen 6 fab and BOE’s Gen 8.5 fab in Fuqing allocate more capacity to monitor panels, the market will probably see monitor panel shipment rise in 2018 for the first time in seven years. The shipment is expected to 140.36 million pieces, a YoY increases of 2%. In terms of brands’ product mixes, they will continue to shift their focus to high-profit specifications, including large-size, borderless, and gaming-related models; so the monitor shipment will gradually drop. The glut ratio of monitor panels is expected to reach 4.9% this year, much higher than the past three years when the figures were lower than 1%.

Panel makers allocate more resources to notebook panels, which have become the most profitable category

Panel makers are going to allocate more resources and capacity to notebook panels driven by the better-than-expected shipments of this category. In addition, notebook panels turn out to be more profitable than TV panels and monitor panels, thus motivating the makers as well. As the result, the shipment of notebook panels are expected to reach 186.01 million pieces in 2018, an increase of 4.9% year-on-year.

On the demand side, notebook vendors will stock up panels in 1Q18 to prepare for the production of new specifications like high resolution, wide viewing angle and narrow border. Therefore, notebook panel shipments will drop by only 1%-2% although notebook shipments are expected to drop by 15%-16% quarterly in 1Q18.

“However, the expected launch of new MacBook Air and MacBook Pro in the second half of this year may influence the sales of other brands, thus dampening the overall shipments of notebook this year”, adds Hu, so suppliers will probably face an oversupply of panels if they do not adjust their production plan accordingly”.